On November 23, 2024, a flash crash on Binance saw Wrapped Bitcoin (WBTC) plummet to a shocking $5,200, marking its all-time low. Meanwhile, the price of original Bitcoin (BTC) on its native blockchain remained steady at $98,000. Here’s a closer look at the sudden drop and its potential causes.
Wrapped Bitcoin Plummets on Binance Amid Flash Crash
The unexpected price drop occurred exclusively on Binance, leaving other exchanges unaffected. Wrapped Bitcoin, which had been trading near $98,000, momentarily dipped to around $5,200. Analysts suggest the crash was likely caused by a technical glitch within the trading system, which briefly impacted WBTC’s valuation.
Despite the steep drop, WBTC quickly rebounded, with Binance’s daily closing price for the asset settling at approximately $97,000. This indicates that the incident had minimal long-term impact on WBTC’s trading value.
Is Coinbase’s Delisting Announcement to Blame?
The flash crash coincided with Coinbase’s recent announcement to delist WBTC, raising speculation about its influence. Coinbase informed users that WBTC trading would be suspended starting December 19, 2024, as part of its routine asset review process.
BiT Global, WBTC’s custodian, criticized the decision, alleging that Coinbase aims to promote its own wrapped Bitcoin product, cbBTC, by sidelining competitors. A BiT Global spokesperson commented:
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“Coinbase’s decision is a clear attempt to gain a competitive edge by pushing cbBTC forward while eliminating WBTC as its largest rival.”
Community Reactions and Wider Implications
The controversy surrounding WBTC extends beyond Coinbase’s delisting. Regulatory debates and governance changes have contributed to uncertainty around the token’s future. In September 2024, Coinbase launched cbBTC, positioning it as a response to evolving custody structures for WBTC, which involve jurisdictions such as the U.S., Hong Kong, and Singapore.
Concerns about custody, particularly those involving Tron’s founder Justin Sun, have sparked backlash. This led the Sky community—formerly Maker—to vote against WBTC being used as collateral on their platform.
What’s Next for Wrapped Bitcoin?
While the flash crash on Binance was a brief anomaly, the broader narrative around WBTC remains uncertain. As market participants await clarity on governance, competition, and regulatory developments, The Bit Journal will continue to provide updates on this evolving story.
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The price predictions and financial analysis presented on this website are for informational purposes only and do not constitute financial, investment, or trading advice. While we strive to provide accurate and up-to-date information, the volatile nature of cryptocurrency markets means that prices can fluctuate significantly and unpredictably.
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